REVENUE

Revenue

Like any business or household, revenues play a critical role for states in determining their levels of spending. Nearly every state is constrained by a balanced budget amendment requiring their general fund expenditures not to exceed revenues (though budget games have allowed them to relax this constraint considerably). When times are tough, many legislators who loathe cutting programs turn to higher taxes as a way to increase revenue. However, as economist Arthur Laffer has shown, higher taxes do not always increase revenue. Minnesota, for example, has been driving high-earners (and their tax dollars) out of the state with its' unfriendly tax climate. Understanding the dynamics of taxation and state revenues is essential for anyone who seeks solutions to state revenue problems; SBS is here to help.

HEADLINES

State revenues in 2013 are up 5.3 percent from this time last year, but state officials are worried the gains will dissipate in 2014, according to a new report from the National Conference of State Legislatures.

HEADLINES: Washington

The Economic and Revenue Forecast Council's monthly report on tax collections says Washington's treasury grew by $72.6 million more over the last month than was forecast. That brings total revenue collections through Aug. 10 to a cumulative $80 million higher than the last quarterly revenue forecast on June 19.

HEADLINES: Kansas

A report Wednesday from the Department of Revenue says July's figures were boosted by strong sales tax collections, which were $9.1 million higher than expected. Overall revenues for the month totaled $425.4 million.

HEADLINES: New York

New York state Comptroller Thomas DiNapoli is sending an early warning that the government's long-term finances rely on one-shot revenue raisers and some temporary tax increases and that some fiscal sleight of hand will make state finances look better just in time for the 2014 elections.

RESEARCH

It is well understood that the federal government must make spending cuts-these cuts will most likely drastically change the amount of federal dollars that are allocated to the states. Unfortunately for most states, dependence on federal funding has continually risen since 2008.

RESEARCH

This fiscal report card on the governors examines state budget actions since 2010 using statistical data to grade the governors on their taxing and spending records-governors who have cut taxes and spending the most receive the highest grades, while those who have increased taxes and spending the most receive the lowest grades.

RESEARCH

The Tax Foundation's 2013 edition of the State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states' tax systems compare. The absence of a major tax is a dominant factor in vaulting many of these ten states to the top of the rankings.

RESEARCH

State finances are not transparent and often include hidden liabilities as well as rapidly growing responsibilities which are difficult to control. While state revenues are gradually recovering from the drastic decline of the Great Recession, they are not growing sufficiently to keep pace with the spending required by Medicaid costs, pensions, and other responsibilities and obligations. This has resulted in persistent and growing structural deficits in many states which threaten their fiscal sustainability.

RESEARCH

States will face particularly intense budgetary challenges in education and health care in fiscal 2013, putting pressure on all budget areas - including corrections and infrastructure. As budgets face strain from slow revenue growth and expenditure pressures, states will likely confront tough budgetary choices in the next fiscal year.

RESEARCH

This fifth edition of Rich States, Poor States provides 50 unique snapshots from our "laboratories of democracy" for you to evaluate. Study the rankings, read the evidence, and learn about the proven principles that lead to economic growth, job creation, and a higher standard of living for all Americans.

SOLUTIONS

State Budget Solutions recommends that state legislators take action in 2013 to resolve the serious state financial crises by changing their focus from inputs to outcomes by redesigning budgets from the ground up based on priorities and performance.

SOLUTIONS: New York

This report analyzes the tax cap proposal in light of previous efforts to limit property taxes in New York and other states. Among the findings, New York's local property tax levels are exceptionally high by national standards and have grown by more than double the inflation rate over the past decade, justifying the governor's push to limit future growth.

SOLUTIONS: Georgia

The Georgia Public Policy Foundation | by Eight Affordable Ideas for Georgia | December 2, 2011

Georgia should continue to push the reforms that have made this one of the best managed states in the nation, but innovation is the best opportunity for true reform. Tax, regulatory and tort reform will create the right conditions for innovation in the private sector while the state pursues innovation in the areas of criminal justice, education and heath care.

SOLUTIONS: North Dakota

A guide to needed reforms in pensions, taxes and higher education, among other areas, with two types of goals that are important when working towards limiting government: long-term policy objectives that show the end-game goals and short-term policies that steer public policy towards the long-term goals. This guide provides both.

SOLUTIONS: Nevada

The Nevada Policy Research Institute | by Geoffrey Lawrence | November 3, 2011

Nevada seriously needs genuine, revenue-neutral fiscal reforms, and this report seeks to fill that vacuum. It analyzes the actual volatility of Nevada's current taxes - and the taxes lawmakers keep signaling they want. It covers important tax-related issues, such as achieving economic efficiency and tax equity, while reducing compliance costs as well as tax-induced distortions in economic behavior. It advocates implementing priority-based budgeting.

SOLUTIONS

Bloated state spending levels and trillions of dollars in unfunded government employee pension liabilities pose huge financial obstacles to economic recovery in the 50 states today. This begs the million-or trillion-dollar question: Why are some states prospering while others are still struggling?

SOLUTIONS: Texas

There has been an impression created in the press and embraced by many that the LBB report suggests that adoption of the bill CSHB1 by Texas would cost Texas 272,000 jobs in 2012 and 335,000 jobs in 2013. This answer, at least as interpreted by the press, is wrong and not based on sound economics. The passage of CSHB1 will not cause less jobs in Texas relative to any other option at hand.

BLOG: Washington

Perhaps the best news about this continued revenue growth in Washington state, besides the fact the economy is showing signs of life, is the fact this $345 million increase has provided more of a cushion for the new 2013-15 budget.

BLOG: Washington

As with all budgets there are good and bad items included in Washington state's latest budget, though the biggest policy success was that lawmakers allowed the 2010 "temporary" tax increases to remain temporary and to expire as promised on July 1st.

BLOG: Washington

Good news for state budget writers - today's revenue forecast has further increased projected revenue for the current and next budget by a combined $231 million for a total increase of more than $2 billion for 2013-15.